A Project of the American Enterprise Institute and the Federalist Society

Administrator Andrew S. Natsios' address at the Interaction Forum

USAID

Remarks by Andrew S. Natsios, Administrator, USAID InterAction Forum Closing Plenary Session May 21, 2003

[Introduction inaudible.]

Results Count

The first point I want to make with respect to the NGO community generally is this: Results count. And if you cannot measure results, if you cannot show what you've done, other partners will be found. Why is that? Doing good is not enough. We have to show what kind of good we're doing, in which sectors, in which communities, and whether the good has bad consequences, or bad side effects, that no one anticipated.

If you cannot show results, and show them empirically, then frankly, I am going to be forced, or my successor will be forced, regardless of which administration is in power, to find other partners. I am giving you some blunt analysis. Why? Because the work we do is now perceived to affect the national survival of the U.S. We had one terrorist attack. You can forget the (World Trade) Towers -- you saw what happened last week in Morocco and in Saudi Arabia. It is only a matter of time before there are other incidents.

It [terrorism] is effective - those of you who think people are doing this just to make newspaper headlines, they're not. Bin Laden over a period of time wants to destroy the economic foundations of the western world. He said that. We don't have to guess what his intention is. So this is not just a matter of isolated terrorist attacks. It is a deliberate attempt to destroy the economic foundations of the West and, I believe, of the new global trading network, of the whole notion of an international trading system. What is the reaction when you're under attack like this? You create walls; those walls haven't happened so far, but it could happen, if we're not very careful.

There are three major ways in which the American people know what's going on in the world and have connections into the Third World:

One is through religious communities, their churches, their synagogues, their mosques, and their temples in the U.S. that give money through their institutions abroad and through their missionaries.

The second is through the NGO community. Your donors get educated about what goes on in the Third World through your newsletters and your magazines. I asked to get a calculation once, when I was with World Vision, and when I added it all up, I think I came up with 6 million American

families receive on a regular basis news from the Third World from the NGO community. I don't know what the size of Newsweek is, but I bet it compares favorably with the larger NGO publications. You are a major way that people connect with people in the developing world.

And the third is the business community.

So you're dealing with three huge ways in which, institutionally, the American people are connected with people in the Third World. We don't want walls being built around those three mechanisms, because we want the American people to continue to be engaged in the world in a constructive way. And that's continuing.

But there are real risks as these terrorist attacks continue. Now, it's not a matter of just doing good, it's a matter of proving results so that we can say to President Karzai when he says, "Andrew, (and he has said this to me three times in the last month)?

[aside]: the finance minister [Afghanistan's Ashraf Ghani] has admitted that he got his degree with an AID scholarship from an institution that was basically subsidized heavily by AID, the American University of Beirut. He got his undergraduate and master's degrees with AID scholarships and [he said] thank you very much, I wouldn't be running the ministry without them."

That's one thing I'd like to revive. We do 900 scholarships a year now. In 1980 we did 20,000. That's a huge drop. You know, one of the reasons for the drop was that we could not prove immediate results. I have a problem with that - with the notion that you have to prove immediate results. Saying you have educated 20,000 people a year who go back to their ministries is something you will have substantial results from over the longer term.

One little vignette: I went to the World Food Summit in Rome last June, or in May -- it was after the last InterAction Forum -- and a man came up to me and said, "I'm the Minister of Agriculture in Guatemala," and I thought I was going to hear about our trade subsidies in the agriculture bill, and he said, "No, I'm not going to criticize the U.S. I want to thank you." I asked why, and he said, "I got my degree with AID help, and I was an FSN - a Foreign Service National - and I worked for AID for many years in the agriculture sector in Guatemala, and I would not be the Minister of Agriculture today except for all the work I did in AID." That's what he said. You know, 8,000 people work for AID and 4,000 of them are not Americans - [they are] Foreign Service Nationals. We did a study - we're finding them in ministries all over the world. We found 5 Prime Ministers or Finance Ministers just in the Caribbean itself, who were former FSNs or contract staff. That's sort of interesting among these younger ministers. So, development works, but it does take awhile sometimes.

But the point that I was starting to make to you is this: the NGOs do some very good work in communities, and the people think that the NGOs raise the money, do the work, and they have no relationship to the US government and to the central ministry. And so when we go to a village and say we're helping you rebuild, they say, "No, you're not, you know. The Americans, they've abandoned us."

I'm hearing this myself. Our staff is hearing it. And it is not just here and there. And I say," Wait a minute, the NGOs are rebuilding the town with you." They say, "That's the NGOs; that has nothing to do with you."

I say, "Where do you think the money comes from? We're providing the grant funding to do this."

They say, "Well, but we didn't know that." Or they don't even understand what a grant is; they don't even understand the relationship between the NGOs and AID.

Now some of you may say, "well, you're being political." It's not political. Karzai, if he falls, we're in big trouble. I don't have to tell all of you what's going to happen. It does affect the survival of the central government if the people in the villages do not believe the central government is being responsive to their needs. And they are not associating the NGO community with that response, even though life is improving. They believe it is improving through mechanisms that have nothing to do with the U.S. government and nothing to do with the central government. That is a very serious problem.

You want to know why we've chosen contractors? I've told them, the contractors, if you even mention your own organization once, when you're in the villages, I will tear your contract up and fire you. I actually said that in Iraq. I said, "You are an arm of the U.S. government right now, because we need to show the people of Iraq an improvement in their standard of living in the next year or two." And I have to have it clearly associated with the U.S. government, for diplomatic reasons which are, in my view, eminently defensible, ethically defensible, and good policy. So, proving results counts, but showing a connection between those results and U.S. policy counts as well.

The Importance of Private Aid Flows

Second point: Carol Adelman has shown very clearly in her report (in USAID's Foreign Aid in the National Interest) that the great bulk of money that goes to the developing world goes through private channels, with private money. You do more work in the developing world with your own resources not associated with ODA (Official Development Assistance) of the U.S. government than anybody ever realized. But if you add in the foundations, the universities, and businesses, it's a huge amount of money - 40 or 50 billion dollars. And the remittances which we're finding out about are being used for development purposes in many countries.

And so we now have the Global Development Alliance, which many of you have worked on, which is an attempt to link these private aid flows in the U.S. with AID funding. We've put $111 million in 68 alliances in FY '02. And we have $376 million put in from private funding, private foreign aid, into these alliances. We are now going to move this out into the structure of AID. It is very clear that by marrying these different aid flows into one unified way of doing things for a common objective - and this is not a grant program, I'm sure all of you know. There is a 3:1 match and I'm sure everybody knows that there are no grant programs where we put in 25% and everyone else puts in 75%. This is not a grant program; it's far beyond that. It's a genuine attempt to leverage large amounts of private sector money in a comprehensive way where there are shared objectives. So working with new partners is going to be essential for NGOs which are the most operational institutions in development?

Building Capacity at the National Level

Third, (this gets back to the Ashraf Ghani point, but let me make a more extensive point): I know the reality, and particularly in countries that are the LDCs, the countries with weak national government, the relationship between the NGO community and local government even in

functioning democracies - I'm not talking about Zimbabwe where you have a predatory and tyrannical regime - I am talking about Mozambique or Ghana or Mali or Honduras, or countries that have decent governments where there are elections and where there is respect for human rights. There is a tension between the NGO community - and you all know this; everybody knows it if you've been in the field, because you get it all the time, I get it all the time -"You have created, AID, a parallel government by supporting the NGO community." And that is not helpful.

Now, is there an answer to this? Yes, there is. Now, I want to give you some advice. This is my advice: you don't have to do it, you can do what you want to do, because your grants allow you some independence. Some NGOs in the field, a few, are training their local staff and their people in the community simultaneously in the same classroom on a comprehensive, systematic, regular basis with local government officials and provincial officials. And they do the two together all the time, not episodically. And, they're sharing their Xerox machines, their fax machines, their telephones, their cars, and their equipment, and all that, because there is deep resentment in these local governments that are starved for resources. They see the NGOs come in with all this stuff, and they don't have any, and they say, "We are in a democratic country, and why are you giving them all these resources?"

It's clear in countries in chaos or with predatory governments, we don't want to work with the government in those countries, we understand that, unless the local government officials are really decent people, which happens sometimes. I'm not talking about those countries; I'm talking about countries that have democratic elections or are moving toward democracy, or have decent local officials whom we can work with. We are not building the capacity, through the NGO community, of local governments. And I'm saying to you now that that is a deep weakness of the NGO community that has to be dealt with. I don't have a good answer when people in the Third World tell me - Ashraf Ghani tells me the same thing in Afghanistan - what are you doing to strengthen the ministries so they can ultimately govern the country?

Building a Truly Sustainable Civil Society

The fourth point is building civil society and building the institutions that make up a democracy over the longer term. The NGO ideology, which I fully support, is to get the community buy in. But I have to tell you when I go to the villages and ask the question, "Exactly how does this work operationally?" I get very disappointing answers sometimes. And I would urge senior managers who are here to actually look at how this is being done in the villages, because in many places, the NGO presidents and senior managers - I used to say it all the time - say that we are doing all these things with community participation.

Define community participation for me. Is there a formal structure in place? Is it in competition with the local government? Does it exist at all? I've been to NGO projects where I've also asked the question "How long (and this is a program that has been around for years - they had this meeting of women who were supposed to be making decisions for the community), and I said 'Really, how many meetings have you had?"

They said, "This is the first one."

I said, "Really, and how long has the program been around?"

They said, "Three years."

"I see. Who is making the decisions?"

"That person over there."

"What person in the community makes the decisions?"

"That one person who works for the NGO. This is the first meeting we've been to."

That is not community participation when it is orchestrated for my visit because it is an AID-funded project. It is not building civil society, okay? And it's a big problem from my perspective. There is a gap between ideology and philosophy generally and actual performance on the question of participation. It is a huge gap, much bigger than people want to accept. Okay? And it needs to be dealt with. Why? Because civil society does make a difference in building a functional democracy. And building permanent institutions at the village level that can stay in a country after the NGO leaves, does make a difference.

And I want to add this: an NGO, a local NGO, that gets money exclusively from AID or a northern NGO, has no other sources of revenue and is entirely supported by outside people - institutions like us or the UN - is not really building civil society. It's a parastatal. And parastatals are ultimately unsustainable. Bringing money in from the outside is essential and important; it has to be accompanied by some way of gathering resources - I've seen some NGOs that say, "Okay, we're going to pay for 50% of this high school that you want us to build, we want you to pay for the other half." They go door-to-door and collect the money; they have a fee; they have a fee for water services or whatever. So I know the NGOs do this, but they do not do it systematically in a sustainable way over the longer term in some - in many - cases. We have not done a study, nor do I want to do one, because it might be disappointing as to what degree we are making these local institutions sustainable when we leave. It is of central importance because if you're really truly building a civil society - institutions that can constrain the power of the state and constrain tyrannical and abusive governments - you have to have something that is sustainable after the international NGO community, or the international UN organizations, or the banks, leave.

Integrating Conflict Resolution into NGO Programs

Final point: It is the case that two-thirds of the countries - I've said this before to you - two-thirds of the countries in which AID works have a conflict. Two-thirds have had a conflict of some kind, either full-scale civil war or some war - two-thirds of the countries in the last 5 years. (It was 5 years when I started in May of last year.) I know some NGOs began doing training of their staff in conflict management and conflict mitigation.

I have to tell you something: if two-thirds of the countries are experiencing substantial violent conflict, if you do not have some mechanism for dealing with this in your programs, you are failing in the most important task NGOs have, which is not just the public service, whether it's health care, or education, whatever it is, because we have to create in these countries mechanisms [for addressing conflict] by taking traditional mechanisms and strengthening them. Sometimes they know more about conflict resolution than we do. I know the clans, traditionally in Somalia, for example, have mechanisms for ending clan abuse by negotiation. Those were destroyed during the 1990s and in the '80s.

But sometimes all we need to look to is to find out traditionally how they resolved their conflicts in the past and then maybe revive them, or strengthen them, or teach them in a systematic way

across the community at the community level. Finding ways of integrating conflict management into your programs, it seems to me, is the most important - next to the creation of sustainable institutions - is the most important thing you can do.

Why? Because American society differs. Why are we successful? Because we have found, for the most part, non-violent means for managing the tensions that exist in our society between the 150 ethnic groups that we have. We have the diasporas from every society on earth. As all of you know, we are a polyglot society. We're a mosaic. It took us a long time; we had a lot of violence in the process, but we found mechanisms for doing that. That is one of the great strengths of American democracy. Now I'm not suggesting clearly that those mechanisms are applicable in the Third World all the time, other than maybe applicable, but we have to find some way of resolving these tensions without having a civil war, because it is extremely destructive to economic investment, it is destructive to political stability, and all it does is weaken already weak states. We don't need that.

So those are my comments to you. I'm way over what I said I would do, but I have 12 minutes, 15 minutes, for questions.